I'm not in government (right now) but I'll take a shot at answering your questions.
As Thomas said earlier, this is essentially a rewording of the original document, with the intent of keeping the original meaning of the document intact while cutting out fluff. So yes, this definition has essentially always been at the heart of the document. And far from being vague and arbitrary, we find this to be quite a simple and concrete working definition of neutrality for us.
No, the politics of signatories outside of their direct relations to the GPA are their own affairs; this clause is intended to relate to direct involvement and not any secondary interests.
Even though we try to remain neutral and wouldn't take sides in a conflict, we also try to cultivate friendly and mutually beneficial relationships with all alliances. We can contribute to economic trading, tips and information, and community-building activities, for example. Though a signature on our DoN isn't required for us to offer that hand of friendship, it indicates that the signatory recognizes and shares that goal, as well as being a token of mutual respect. Given that there is little cost to doing so, many alliances (and some independent nations!) have elected to advance diplomatically in that fashion.
We're always happy to explain ourselves to those who are curious; thank you for your questions.